Privet Fund and UPG Enterprises Issue Letter to Stockholders Reinforcing the Need to Reconstitute a Majority of the Board at Synalloy's Annual Meeting
Privet Fund Management LLC (together with its affiliates, "Privet") and UPG Enterprises LLC (together with its affiliates, "UPG" and collectively with Privet, the "Stockholder Group" or "we" or "us"), which collectively own approximately 24.9% of the outstanding common stock of Synalloy Corporation (NASDAQ: SYNL) ("Synalloy" or the "Company"), today issued the below open letter in connection with its nomination of five highly-qualified and independent candidates - Andee Harris, Chris Hutter, Aldo Mazzaferro, Ben Rosenzweig and John Schauerman - for election to Synalloy's Board of Directors at the upcoming Annual Meeting of Stockholders scheduled to be held on June 30, 2020. We urge all stockholders seeking to protect and enhance the value of their investment to vote on the WHITE Proxy Card. Stockholders can review all of the facts pertaining to Privet, UPG, our nominees, and their strategy for delivering up to $25 per share in near-term value and repositioning the Company for long-term success at www.StrengthenSynalloy.com.
Privet Fund Management LLC (together with its affiliates, "Privet") and UPG Enterprises LLC (together with its affiliates, "UPG" and collectively with Privet, the "Stockholder Group" or "we" or "us") have maintained one overarching goal since the outset of this election contest: deliver the meaningful - not incremental - change urgently needed atop Synalloy Corporation ("Synalloy" or the "Company"). We nominated five highly-qualified individuals for election to the Company's eight-member Board of Directors (the "Board") because minority representation will not dislodge the incumbents, who have spent the last decade delivering staggering underperformance and racking up massive debt while failing to realize the potential of Synalloy's high-quality assets and skilled workforce. We believe the need for meaningful change at Synalloy has only grown in recent weeks as the Company has failed to produce a strategic turnaround plan and its stock has plunged to a near five-year low of $6.51 and has now been dropped from the Russell 3000.1
For Privet and UPG, this election contest has always been about putting qualified individuals in place who can address Synalloy's fixable weaknesses in the near-term and reposition the Company as a thriving public market participant over the long-term. This is why we released a detailed and transparent plan earlier this month that outlines revenue enhancement priorities, margin improvement initiatives and cost containment efforts. We continue to believe that immediate corrective action can ensure Synalloy averts financial distress, navigates any second wave of COVID-19 and delivers up to $25 per share in near-term value. Our plan also makes it abundantly clear that we are not seeking to acquire Synalloy in the future or initiate a so-called "integration" with UPG moving forward. Despite the incumbents' desperate attempts to divert attention from their lack of qualifications and objectively horrendous results, Privet and all of the Stockholder Group's nominees besides Chris Hutter have no financial stake in UPG. The Stockholder Group and its nominees would gain absolutely nothing from allowing any of Synalloy's value to accrue to another entity. We only make money when Synalloy's stock rises, and that has not happened under the incumbent Board.
Now that this election contest is nearing its conclusion, we are asking stockholders to consider one final question as they make up their minds: which slate is offering the best people, plan and projected results? This is perhaps the most important question of all once the rancor and rhetoric are set aside. We believe an objective review of the facts should point stockholders to the slate running on the WHITE Proxy Card:
As this election contest has unfolded, we have been truly disappointed to see that the incumbent Board and Mr. Bram have resorted to what amount to dirty tricks and misinformation tactics. The Company has issued a press release nearly every day for the past week. Not a single one of these communications lays out what the incumbents stand for, how they plan to run the business or their long-term strategic vision. We cannot help but suspect that this approach - distractions and baseless mischaracterizations over business substance - has contributed to the massive erosion of stockholder value in recent weeks. Now that Synalloy's stock price is down more than 20% over the past 30 days, its market capitalization is roughly half of what it was just a year ago. This dire situation is compounded by the fact that Synalloy's debt now exceeds its equity market value and the Company appears destined to imminently breach its borrowing covenants.
Bleak as all of this may seem, facilitating meaningful Board-level change at the Annual Meeting of Stockholders can be the remedy. Our nominees are ready to hit the ground running immediately and direct all of the Board's efforts towards prompt revenue enhancements, expedited cost cuts and immediate management of the Company's debt, including through leveraging Messrs. Rosenzweig and Hutter's relationships in the banking community to explore more favorable refinancing options. Mr. Hutter also intends to begin his tenure as interim Chief Executive Officer by traveling to all eight of Synalloy's businesses to meet with the first, second and third shift teams and managers. We will not waste any time engineering the wholesale turnaround that Synalloy clearly needs in order to avert financial distress and navigate the tremendous period of economic uncertainly that may ensue if COVID-19's second wave picks up.
We hope all stockholders recognize that Privet, UPG and their nominees have not just invested capital in Synalloy, but also hundreds of hours of thoughtful planning and thorough preparation. When stockholders consider which slate offers the better people, plan and projected results, it should be clear that our slate is prepared to always go the extra mile for stockholders, employees, customers, vendors and the communities Synalloy operates in. We could not be more excited about the opportunity to build a stronger Synalloy that rewards stockholders and benefits all of the Company's stakeholders for years to come.
Thank you for your support.
About Privet Fund Management LLC
Privet Fund Management LLC is a private investment firm focused on investing in and partnering with small capitalization companies. The firm has flexible, long-term capital with the ability to effectuate investments across all levels of the capital structure. Privet was founded in 2007 and is based in Atlanta, GA.
About UPG Enterprises LLC
UPG Enterprises LLC is an operator of a diverse set of industrial companies focused on metals, manufacturing, distribution and logistics. Our success continues to be driven from within, starting with our dedicated employees who operate with a sense of urgency, commitment to customers and flexibility to do what's right on the spot without question. With 25 locations throughout North America, its operations continue to grow with the intention of building a business based on culture, respect and growth. Founded by two families with multi-generational experience in various industries, UPG prides itself on having a long-term approach to business, entrepreneurial spirit and excellent teams that represent its family of companies. To learn more, visit www.upgllc.com.
1 Synalloy Corporation's common stock traded as low as $6.61 during intraday trading on June 25, 2020.
2 Horizon Capital Management, Inc. Form ADV dated January 20, 2020 (https://reports.adviserinfo.sec.gov/reports/ADV/115815/PDF/115815.pdf).